 Home buyers: "Your House is not an asset"Friday, January 20, 2012 - Article by: Brian McFedries -
Home buyers: "Your House is not an asset"
Over the last 10 years, many home buyers found out that buying a house was more like living the nightmare, not the dream. What got most people into trouble was they failed to realize that, on balance sheet , a house is a liability, not an asset. You constantly pump money into the property, and for the most part, won't get out of it what you've invested . Home buyers ;That sounds like a liability to me, not an asset. So before you buy your next house, you should ask yourself "what's it going to cost me," as opposed to "how much can I make off of it." That will help you keep your housing costs in line with your income. I know most home buyers have been led to believe that a house is an asset. Home buyers believe the home will appreciate over time. (maybe) Think about this: Assume you buy a home and don't put a dime into it for 30 years. You don't paint it, repair it, or update it. You just let it sit there. How much do you think that home will be worth at the end of 30 years? Not much. Or an actual $300,000 mortgage over 30 years actually cost you roughly $575,000 by the time you pay it off. Of course I am not counting taxes, utilities, insurance etc. . Home Buyers:To maintain the value of your home,a home buyer would have to constantly put money into it. A good estimate is about 2% to 3% a year of the cost of the home. If you bought a $300,000 home, consider that it'll cost $6,000 to $9,000 a year on average to keep it up. Now you won't spend that every year, but that's what you should be budgeting for the costs of maintenance. At some point, the furnace blows, the air conditioner dies, the water line breaks, the roof needs to be repaired, the windows need to be replaced, the kitchen needs to be updated etc. |
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